Art. 31 Succession Regulation (650/2012) – a first look at ... · general application of lex rei...

Ius Commune Nov. 2013

Art. 31 Succession Regulation (650/2012) – a first look at a

mysterious provision

Patrick Wautelet


I. What is the problem?

• Succession necessarily entails transfer of rights in rem (from estate of deceased to various beneficiaries)

• Succession law governs– Determination of rights accruing

to heirs-legatees

– Transfer of rights (and obligations) to heirs-legatees (art. 23 par. 2-e Reg.)



• “Nature” of the rights in rem vested and transferred by succession law : outside Regulation (art. 1 par. 2-k Reg.)

• In many cases, no difficulties as succession law coincides with law of MS where right in rem is relied upon (not necessarily lex rei sitae)



• In some cases, no such 'Gleichlauf ' - distinction between succession law and law of country where right is exercised – e.g.

– Estate includes assets in other MS than that of habitual residence of deceased

– Succession of 3rd country national with choice of law (art. 22)



• In case succession law and law of country where right in rem is relied diverge, possible 'short-circuit'

• Problem could arise for both movables and immovables (compare situation under current regime – in some States, local immovables are never subject to foreign law e.g. Belgium)


II. The Regulation's answer

• Art. 31 : 'adaptation' as answer:• “Where a person invokes a right in rem to

which he is entitled under the law applicable to the succession and the law of the Member State in which the right is invoked does not know the right in rem in question, that right shall, if necessary and to the extent possible, be adapted to the closest equivalent right in rem under the law of that State, taking into account the aims and the interests pursued by the specific right in rem and the effects attached to it”



• Two questions:

– When is Art. 31 relevant?

– How does it work?

• How to resolve these questions?



• Proposed guidelines when applying Art. 31:

– Art. 31 is not a 'wild card' allowing general application of lex rei sitae over and above succession law

– Art. 31 offers MS a limited possibility to deviate, in limited number of circumstances, from normal application of succession law



• Why 'modest' application of Art. 31?– Art. 23 grants succession law very wide

scope – 'monopoly' of succession law in succession matters, Art. 31 is a nuance

– Regulation is strikingly less tolerant of 'deviation' than the many exceptions included in Insolvency Regulation for rights in rem (artt. 5-7-8-11)

– Regulation based on mutual trust between MS - MS should not undermine effet utile of Regulation


III. When is Art. 31 relevant?

• Threshold question : when is Art. 31 relevant?

• Art. 31 kicks in if right in rem is “unknown”

• What is standard?



• 1) Art. 31 not relevant if difference as to 'mode of transfer' to heirs-legatees ('saisine' – 'administration' – 'Einantwortung', etc.)

• 2) Art. 31 not applicable if right in rem is known by law of State, but not granted ex lege (or even ex successionis) to heir/legatee (e.g. usufruct granted to surviving spouse in FR/BE and not in DE)



• 3) Art. 31 does not require analysis of position of heir/legatee if law of 'art. 31 State' had applied to succession (e.g. succession under French law - legatee has a 'right in rem' – per vindicationem – asset in Germany where succession law would give legatee only personal right)



• 4) Analysis should focus not on 'technicalities' of rights in rem (rights in rem are creation of the law → always differences → general application of Art. 31) but remain on level of principles and focus on 'outcome' (actual position of holder of right in rem)

• See Recital 16 : “... account should be taken of the aims and the interests pursued by the specific right in rem and the effects attached to it”



• 5) Art. 31 only relevant if significant differences between rights in rem – e.g.

– If succession law and Art. 31 law grants usufructee different prerogatives (may usufructee assign his right : FR yes, DE no) : not 'unknown'

– If differences between prerogatives is significant, art. 31 may be applied (art. 3-215 NBW – 'vruchtgebruik met interingsbevoegdheid')



• (provisional) Conclusion– In some cases application of Art.

31 obvious (e.g. if under applicable succession law, deceased has created a trust and assets held in Belgium)

– In many cases : gray zone (e.g. what if deceased created a trust and assets held in Lxbg?)


IV. How does Art. 31 work?

• Heart of the mechanism : 'adaptation' to the closest equivalent right in rem

• Not a novelty : see recognition of foreign security interests



• What Art. 31 does not entail :– 1) Art. 31 does not introduce a

distinction between creation of the right (succession law) and exercise (falling under lex rei sitae)

– 2) Art. 31 does not allow pure and complete application of 'lex rei sitae' to all 'incoming' rights



• What Art. 31 does not entail :– 3) Art. 31 does not introduce

possibility to refuse altogether effect to foreign right in rem – even in case foreign right in rem is truly 'foreign'



• Why no possibility to refuse effect?– Existence of Art. 31 entails obligation to

use adaptation (“... ce droit … est adapté au droit réel équivalent” / “that right shall … be adapted to the closest equivalent right...” / “...so ist dieses Recht … am ehesten vergleichbare Recht anzupassen...”)

– No possibility to refuse right in rem (Recital 16 trumps Recital 15)

– Public policy? Much higher threshold



• If no refusal, what solution? → Adaptation

• How to adapt? Hinnahmetheorie or Transpositionslehre?

• Art. 31 leaves MS freedom to choose – Finding equivalent in local law

– Recognize foreign right in rem in 'reduced' fashion


By way of conclusion

• Many open questions• Clear role for comparative property

law:– Clarify threshold issue

('unknown')

– Provide guidelines for adaptation work

Art. 31 Succession Regulation (650/2012) – a first look at ... · general application of lex rei...

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